OFW remittances hit record high of $16.4 billion

MANILA, Philippines – Despite the global financial crisis, remittances from Filipinos working abroad   beat expectations, rising by 13.7 percent to hit a record high of $16.4 billion in 2008 from a year ago level, the Bangko Sentral ng Pili-pinas (BSP) reported yesterday.

Last year’s remittances exceeded the central bank’s target of $16.3 billion.

For December alone, remittances hit $1.4 billion, an increase of 0.8 percent over the same period in 2007, the BSP said.

The major sources of remittances in 2008 were the United States, Saudi Arabia, Canada, the United Kingdom, Italy, the United Arab Emirates and Japan.

“Amidst the challenges posed by the global financial market strains and the economic downturn experienced by host economies, remittances from overseas Filipinos remain a dependable source of foreign exchange for the economy,” BSP Governor Amando M. Tetangco Jr. said.

He attributed the increase to sustained demand for Filipino workers abroad, particularly professionals and skilled workers.

Government figures show that Filipinos who went abroad to work in 2008 rose 27.8 percent to $1.376 million.

The central bank said it expects a contraction in the number of workers deployed to countries that are suffering from the global financial crisis but it added that there appeared to be strong demand for workers in countries such as Canada, Bulgaria, Australia, the United Arab Emirates and Qatar.

The Philippines is one of the world’s leading sources for skilled and unskilled workers with up to nine million people, about 10 percent of the population, living and working in 140 countries.

Their remittances have become a major pillar in supporting the economy contributing to about 10 percent of the country’s gross domestic product.

The government has been promoting the deployment of more workers overseas as the world financial crisis sent exports plunging 40 percent in December.

Preliminary data from the Philippine Overseas Employment Administration (POEA) showed that the number of Filipinos deployed abroad in 2008 rose considerably by 27.8 percent to 1,376,823 from 1,077,623 in 2007.

However, the number deployed abroad in December declined by 5.8 percent to 89,799 compared to the deployment figure in December of 2007.

The all-time-high remittance level in 2008, however, might be the last of the surge that the country would see in the next few years, with some quarters even expecting a drastic 20 percent decline in remittance inflows this year.

HSBC earlier said it is expecting a dramatic decline in remittances primarily because of the global recession, particularly in developed economies that the International Monetary Fund (IMF) admitted are entering economic depression.

But the BSP said there were favorable developments that provided monetary officials some reason for optimism.

“Specifically, the POEA indicated that labor demand could remain strong in Canada, Bulgaria, Australia, the United Arab Emirates, and Qatar,” Tetangco said. “Qatar in particular could continue to demand foreign workers in the power/energy, tourism/hotel and real estate sectors.”

Tetangco expects Filipino workers to benefit from the hiring program for nurses and caregivers in Japan under the Japan-Philippines Economic Partnership Agreement (JPEPA).

The program is expected to begin by end of April or early May this year but Japan itself has entered a recession. On the other hand, these jobs were considered recession-proof.

The BSP itself has only been willing to admit the possibility that remittances would not increase for the first time since the country started deploying workers abroad.

BSP Deputy Governor Diwa Guinigundo said it is true that the emerging economic depression in developed economies is costing overseas Filipinos their jobs.

Guinigundo said there was a marked loss of jobs for Filipino workers in the US and Taiwan, traditionally two of the country’s biggest market of labor exports since the early 1970s, along with Middle Eastern countries like Saudi Arabia and United Arab Emirates.

But Guinigundo said the deployment of Filipino workers is still rising by double-digit rates, at least for the time being. He said this would partly offset the decline in remittances caused by the loss of jobs in other job markets.

Guinigundo said that if deployment was rising by 20 percent, remittance inflows would have enough off-setting force to maintain at least the same level of remittances as 2008.

“We don’t believe remittances would drop to negative growth,” Guinigundo said. “At the very least, we are expecting a zero growth.–Des Ferriols, Philippine Star